Bitcoin Consolidates at $90,000 – Chart Pattern Signals Further Correction

Bitcoin Remains in Consolidation Phase

The cryptocurrency market is currently experiencing sideways movement. Bitcoin is down nearly 2 percent and trading at approximately $89,000^[2]. The overall market is correcting by around 1.3 percent, while altcoins are recording losses between one and occasionally up to five percent^[2].

Institutional investors are also showing restraint. Since early December, Bitcoin spot ETFs have recorded only minimal inflows and outflows – major capital flows remain absent^[2]. An exception is XRP spot ETFs, which attract approximately $200 million nearly every week. On December 8, the fifth Ripple ETF was approved via Coinshares' product offering^[2].

Bearish Flag Formation in Daily Chart

Technical analysts have identified a so-called bear flag formation in Bitcoin's chart, which developed following the decline from November highs of $107,000^[1]. The recent recovery was rejected at the upper boundary of the flag at approximately $93,000^[1].

Should Bitcoin close below the lower boundary at $90,000, this could pave the way for a decline to the formation's measured target of $67,380 – roughly equivalent to the 2021 price high^[1]. This would represent a 25 percent decline from current price levels^[1].

"Indicators such as MACD and RSI were extremely oversold, and this movement allows them to cool off so we can continue our downtrend," trader Roman explained, referring to Bitcoin's consolidation within the flag^[1].

Pseudonymous analyst Colin Talks Crypto noted that the zone between $74,000 and $77,000 would be "the most likely bottom," even if a decline represents the expected outcome of the flag validation. He added: "I would also expect a strong recovery if such a level is reached."^[1]

Weak Demand Pressures Bitcoin

Bitcoin's ability to move above the yearly opening level of $93,000 appears limited due to absent buyers^[1]. The cumulative volume delta (CVD) for Bitcoin spot, an indicator measuring the net difference between buy and sell volume, shows that net purchases on exchanges remain negative even following the recent recovery^[1].

According to Glassnode's latest Market Impulse Report, Bitcoin's spot CVD weakened within the past week from -$40.8 million to -$111.7 million, "indicating stronger underlying selling pressure." Glassnode added: "This sharp decline signals a marked increase in aggressive selling and suggests weaker buyer conviction as well as a short-term tendency toward bearish sentiment."^[1]

Monetary Policy Shapes Market Environment

The current market environment is significantly influenced by monetary policy signals from Japan and the United States. While the Bank of Japan hints at a hawkish course with a possible interest rate increase in December, pressuring international carry trades, markets are pricing in a further 25 basis point rate cut by the Fed^[2].

Concern about Japanese interest rate normalization, however, is driving risk-off sentiment globally, particularly evident in the cryptocurrency market. Many professional market participants had utilized favorable yen financing over years to invest in riskier assets such as Bitcoin. With the prospect of rising BoJ rates and a volatile yen, this model is becoming increasingly unattractive^[2].